Conversion of E-Data

Originally appeared in The National Law Journal, October 1, 2007.

Little did William the Conqueror know that when he won the Battle of Hastings in 1066, his victory would have ramifications for protecting computer data. The Norman Conquest established a system for addressing the theft of chattels that evolved to the present-day cause of action for conversion. This ancient common law civil remedy has recently emerged as a potential key legal theory in the fight against computer crime. Conversion "is the civil analog of the criminal actions of robbery and larceny," which has long provided victims redress against the "unlawful taking or retention of tangible personal property" as opposed to intangible computer data. In re Robert R. Fox, 370 B.R. 104, 121 (B.A.P. 6th Cir. 2007). Since computer data have been viewed as intangible property, their theft has not been traditionally viewed as conversion. See e.g. Slim CD Inc. v. Heartland Payment Systems Inc., No. 06-2256, 2007 WL 2459349, at *12 (D.N.J. Aug. 24, 2007).

When company data are stolen or maliciously destroyed, the modern cause of action is the federal Computer Fraud and Abuse Act (CFAA), 18 U.S.C. 1030, a criminal statute that expressly provides for a civil action for damages and injunctive relief for anyone "who suffers damage or loss by reason of a violation of" the statute. 18 U.S.C. 1030(g). The CFAA was intended to provide law enforcement and private litigants with updated tools to combat criminal activity directed at computers. Pacific Aerospace & Electronics Inc. v. Taylor, 295 F. Supp. 2d 1188, 1194-95 (E.D. Wash. 2003). Based on the CFAA, a company is empowered to file a federal suit to recover its stolen computer data, seek an injunction to prevent their use and dissemination, and recover damages for stolen and destroyed data.

'Thyroff' Opened Another Route To Remedy Data Theft

The CFAA's monopoly on the protection of computer data changed dramatically early this year with a decision from New York's highest court in Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283 (N.Y. 2007). The court abandoned the tangible/intangible property distinction and held that conversion applies to computer data. This article examines the holding in Thyroff, how it extended the law of conversion that has been developing in other state jurisdictions and the practical differences between conversion and a cause of action based on the CFAA.

Louis E. Thyroff, an insurance agent, was...